From ......... The San Jose Mercury News

Wednesday, May 6, 1987

Page: 1A

Retired Air Force Maj. Gen. Richard V. Secord testified Tuesday at the opening of congressional hearings into the Iran- Contra affair that government officials, including then CIA Director William Casey, helped in the operation to supply weapons to the Nicaraguan rebels after Congress had prohibited such aid.

Secord, ending months of silence, also testified that only about $3.5 million of the $18 million in profits from the sale of arms to Iran actually was spent on behalf of the Contras. More than half of the money, he said, was kept by his business partner, Albert Hakim of Los Gatos.

Secord also offered a second-hand account of a meeting in which Vice President George Bush allegedly discussed details of the Contra-supply network. Bush has denied knowing about the operation, and his spokeswoman repeated that denial Tuesday.

Secord provided new and explicit details about the Iran- Contra affair to a national television audience as well as rapt lawmakers assembled in the historic Senate caucus room. He is expected to testify for at least two more days.

Speaking matter-of-factly and without visible emotion, Secord, 54, told his story publicly for the first time. He recounted numerous meetings with Casey and former National Security Council aide Lt. Col. Oliver North at which he said his services in providing the Contras with weapons were discussed.

Secord, a former combat pilot in Vietnam, told the joint House-Senate committee that he believed he had done nothing wrong and that he had acted in the best interests of the United States.

''We believed very much in the significance of what we were doing and that our conduct was in furtherance of the president's policies," said Secord, who testified voluntarily, without a grant of immunity. "I also understood that this administration knew of my conduct and approved it."

However, Secord never implicated President Reagan in the clandestine Contra operation. He presented no evidence to suggest that Reagan was aware of the covert network.

Most detailed account

In three hours of testimony, Secord provided the most detailed account to date of what happened to the $18 million in profits generated by U.S. arms sales to Iran.

While he praised North and former national security adviser John Poindexter, both key White House players in the Iran- Contra affair, Secord condemned Attorney General Edwin Meese for his "grossly inaccurate" and "unforgivable" disclosure in November that profits from the Iranian arms sales had been diverted to the Contras.

Meese estimated in November that the Contras received between $10 million and $30 million.

On the contrary, according to Secord, the Contras received only a small share of the $30 million that was funneled from the Iranian arms sales into the Swiss bank account of Lake Resources Inc., controlled by Hakim, his Iranian-American business partner.

$12 million for Pentagon

Secord said $12 million was used to reimburse the Defense Department for the weapons. Reading from records that Hakim gave congressional investigators, Secord accounted for the remaining $18 million as follows:

* ......$3.5 million for the Contras. These funds, Secord said, were added to $2 million in private donations for the Contras that went through the same account. Although most of it was spent on military equipment and transport, three Contra leaders -- Adolfo Calero, Arturo Cruz and Alfonso Robello -- received some direct payments, Secord said.

* ......$3 million to transport the arms to Iran.

* ......About $500,000 to pay agents of the Drug Enforcement Administration for their work in a previously undisclosed operation to free American hostages in Lebanon.

* ......$350,000 to procure a Danish ship, the Erria, which was "bought to be used on another government project." The Los Angeles Times has reported that the Erria was purchased for an aborted plan by North to establish a platform in the Mediterranean to broadcast propaganda against Libyan leader Moammar Gadhafi. It was used instead to ferry arms.

* ......$100,000 for radio and telephone equipment for an unidentified Caribbean country.

* ......$6.5 million for "a fiduciary agent" for the use of Hakim.

* ......$1.3 million remaining in the Lake Resources account.

* ......$2 million still unaccounted for. Investigators are expected to account for it as soon as all the records are reviewed.

Shadowy network

The bulk of Secord's testimony dealt with a shadowy network involving Swiss bank accounts, arms dealers and clandestine air drops aimed at keeping the Nicaraguan rebels supplied with weapons at a time when U.S. military aid had been cut off by Congress.

For two years, beginning in October 1984, U.S. agencies involved in intelligence activities were prohibited by Congress from spending money directly or indirectly in support of the Contras.

But during that time period, Secord said, he met repeatedly with administration officials -- primarily North -- to plan and coordinate secret overseas arms shipments to the Contras and, eventually, a private airlift operation to keep the Contras supplied with weapons.

Apparent violations

The involvement of administration officials in encouraging military aid to the Contras appears to have violated the spirit, if not the letter, of the congressional bans. A special prosecutor is investigating possible criminal violations stemming from the diversion and the Contra supply operation. The officials involved included:

* ......Casey, whom Secord said he met three times regarding the secret airlift operation in 1985 and 1986 -- meetings that had not been disclosed publicly before. Casey resigned after surgery last year for a cancerous brain tumor and is not expected to testify.

* ......Bush, who, according to Secord, attended a meeting in August at which the secret operation to supply arms to the Contras was discussed.

Secord said he was told that Felix Rodriguez, a former CIA operative in Central America, was critical of the airlift and accused Secord of providing the Contras with shoddy weapons. Secord said he was told Rodriguez took his complaints to Bush's national security aide, Donald Gregg, and later directly to the vice president.

Gayle Fisher, a Bush spokeswoman, said Tuesday that Secord's testimony about the vice president was "not true."

* ......Senior CIA officers in Honduras and Costa Rica, the U.S. ambassadors in Costa Rica and El Salvador and U.S. Army officers in El Salvador, who Secord said also gave support to the Contra supply network.

* ......Elliot Abrams, the assistant secretary of state responsible for Latin America, whose assistance in resolving a snag in the resupply flights was sought by Secord in a coded telegram released by the committee. Abrams has denied any unlawful involvement in the Contra aid operation.

Secord-Casey meetings

Secord testified that the first of three meetings with Casey took place shortly before Christmas 1985. He said Casey summoned Secord to his office at CIA headquarters.

The two talked for five minutes before realizing they were discussing different countries. Casey was talking about Iran; Secord assumed the topic was Nicaragua.

''We were hemispheres apart for a while," Secord said. "The director isn't the easiest guy I've ever communicated with, but I have great respect for the man." Secord testified that he asked Casey to provide intelligence information for the supply flights. Casey was generally supportive, but non-committal, Secord said. When CIA help was not forthcoming, Secord arranged a second meeting to complain to Casey. Again, Casey made no commitments.

At his third meeting with Casey, in May 1986, Secord testified, the CIA director asked him to approach officials of a foreign country -- believed to be Brunei -- for $10 million to help the Contras through the summer.

Says he made no profit

Secord asserted that he had made no profits for himself in two years of involvement in North's network. His motive, he said was to earn his way back into government service. He had retired from the Air Force under a cloud in 1983, because of his association with renegade CIA agent Edwin P. Wilson, who was convicted of selling arms and explosives to Libya.

In detailing the secret Contra operation, Secord said he first was contacted by North in summer 1984 and asked to aid the Contras in light of the waning support in Congress for the rebels.

As a result of the meeting, Secord said, he arranged for four shipments of rifles, hand grenades, ammunition, rockets, anti-tank mines and other armaments during the first half of 1985. Secord said none of the weapons came from the United States.

Secord said North also asked him in 1984 to solicit a contribution to the Contras from a foreign government, one he did not identify.

New turn

The secret support for the Contras took a new turn in the summer of 1985, Secord said, when North met with him and rebel leaders about establishing an air operation that could fly at night and drop supplies to Contras based inside Nicaragua.

It was this resupply operation, Secord said, that benefited from the $3.5 million in funds diverted from the Iran arms profits.

Before hearing from Secord, the committees devoted the first two hours of their session to opening statements by panel members.